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In Smith v. Armstrong et al., a decision released on April 17, 2018, the Ontario Superior Court of Justice dismissed a proposed class proceeding for reasons of delay.

The proceeding was initiated in January 2000 on behalf of members of the Canadian Armed Forces (“CAF”) who were allegedly required to take the antimalarial drug Melofquine while deployed to Somalia in 1992 and 1993.

The Plaintiff alleged that the drug produced harmful long-term side-effects and that its mandatory administration to members of the plaintiff class constituted negligence, battery, and a breach of their Charter rights.

The Plaintiff waited 16 years before seeking leave from the court to bring the certification motion. The Defendants also moved for dismissal of the action for delay.

Upon reviewing the relevant authorities the Court set out certain criteria for deciding whether (i) to grant a plaintiff’s motion for leave to proceed with a certification motion or (ii) to grant a defendant’s motion for dismissal.

This is the most significant statement to date about how the courts will deal with motions related to delays in Ontario class proceedings.

Procedural Background

The Statement of Claim was filed on February 14, 2000, with an amended Claim filed on September 13, 2001 to include a claim for Charter damages. The Defendants delivered a Statement of Defence on December 3, 2001.

In 2006, by which time the Plaintiff had not advanced the action for five years, the Defendants – who included the drug’s manufacturer, a military doctor and the Attorney General of Canada – unsuccessfully sought a consent dismissal of the action. During the subsequent ten years, the parties engaged in a series of communications about potential changes to the solicitors representing the Plaintiff, but made no progress in advancing the litigation. On November 22, 2016, a Notice of Change of Solicitors was served on the Defendants. Shortly thereafter, counsel for the Plaintiff proposed a timetable and moved for leave to proceed with the certification motion. The Defendants moved to dismiss the action for delay.

Motion for Leave to Proceed with the Certification Motion

Leave to bring a certification motion after the expiry of certain time periods is required by section 2 of the Class Proceedings Act, 1992 but tends to be addressed through judicial case management and scheduling directions rather than by formal motion procedures. In addition, section 2 does not contemplate a test for leave and, as noted by the judge, none of the cases that have dealt with that section have articulated a test for granting leave. They have, however, considered a number of factors, including:

Whether there is a reasonable explanation for the delay;

Whether the defendant has been complicit in the delay; and

Whether the defendant’s ability to answer the case against it has been prejudiced by the delay (with a longer delay generally strengthening the inference of prejudice).

A motion for leave to bring a certification motion outside the time limits, as per section 2 of the CPA, requires the court to balance the plaintiff’s interest to proceed with the case on its merits and the defendant’s entitlement to a fair and efficient trial. In the absence of a specific statutory test, the test is the “interests of justice”, with the plaintiff having the onus of establishing that granting leave is in the interests of justice having regard to the competing interests of plaintiff and defendant as just described.

A failure to proceed diligently within the time frame provided by the CPA may lead the court to infer that the plaintiff does not have a genuine interest in having the matter determined on the merits. Thus the plaintiff will have to satisfy the Court that the delay is not unreasonable, given the nature of the case, or that there is a reasonable excuse for it.

The Court’s Reasoning on the Leave Motion

Ultimately in this case the Court dismissed the Plaintiff’s motion for leave because of the lack of adequate explanation for the delay and the strong presumption of prejudice to the Defendants. Explanations offered included the plaintiff’s medical condition and an initial lack of available expert evidence (which was cured as more research was conducted). The Court concluded that these explanations, and several others that were offered, did not excuse more than a small part of the delay that actually occurred.

Motion for Dismissal for Delay

The Defendants’ motion for dismissal for delay referred to Rules 24.01(1) and 24.01(2) in the Ontario Rules of Civil Procedure:

Rule 24.01(1) allows a defendant to move for dismissal where (among other possibilities that were not at issue here) the plaintiff has done neither of the following: (i) set the action down for trial within 6 months of the close of pleadings, or (ii) noted in default any defendant who has failed to deliver a statement of claim within 30 days of the default.

Rule 24.01(2), which replaced the former Rule 48.14(13), requires the court to dismiss an action for delay where the action has not been set down for trial or terminated within 5 years of its commencement or where, having been struck off a trial list, it has not been restored to such a list or terminated within 2 years, unless the plaintiff demonstrates that dismissal would be unjust.

Where a defendant is entitled to move for dismissal under Rule 24.01(1), the court will ask the following questions, set out in the Ontario Court of Appeal’s 2016 ruling in Sickinger v. Krek:

Was the delay inordinate, considering the length of time from the commencement of the proceeding to the motion to dismiss, acknowledging that some cases may move more slowly given their complexity or the parties involved;

Was the delay excusable, considering the reasons offered for the delay and the credibility of such reasons; and

Was the delay prejudicial to the defendant (an inordinate delay will give rise to a presumption of prejudice that must be rebutted by the plaintiff)?

Section 24.01(2) differs in that it places the onus on the plaintiff, who would again have to show either that the delay was excusable or that it did not prejudice the defendant.

The Court’s Reasoning on Dismissal for Delay

In granting the motion to dismiss the action for delay, the Court found that the delay was patently inordinate and the Plaintiff was unable to establish a reasonable excuse for much of the delay. As held in a previous Ontario Court of Appeal decision, Wallace v Crate’s Marine Sales Ltd., 2014 ONCA 671, “there comes a time when enough is enough and the civil justice system will no longer tolerate an inordinate and inexplicable delay”.

Having resolved the inordinate delay and excusability questions, the Court turned to the more complex issue of prejudice. In the context of presumptive prejudice, the Court noted that the presumption relating to such prejudice is “reasonably strong” and will not be rebutted by alleging that the responsibility rests with the Defendants to preserve documents or question the necessary witnesses while available. In this case, the Defendants could not be faulted for not having undertaken costly efforts to question witnesses and preserve documents when it was not clear (as indeed it is still not clear) that they were facing a class action as opposed to an action by two individual plaintiffs. In accepting this argument, the Court evinced a willingness to take “economic realities” into account in deciding whether a lengthy delay is prejudicial.

General evidence of the existence of archived documentation or of the preservation of other evidence by a defendant will also be insufficient to rebut the prejudice where, as in this case, the nature of the archived documentation (e.g. whether it includes witness statements made under oath, whether those witnesses are still available to testify, etc.) is not clear.

Effect on other Potential Class Members

Notably, although the Court was prepared to dismiss the plaintiff’s action for delay, the Court determined that notice of the dismissal should be given to other putative class members whose limitation periods had been tolled during the pendency of the proposed class action, leaving open the possibility that another proposed class member could come forward with a new proceeding. The Court noted that the effect of the 15 year “ultimate limitation period” under Ontario’s Limitations Act, 2002on the viability of those claims remains uncertain.

Take-away

Smith v Armstrong underscores the importance of the timely resolution of disputes and the need to encourage plaintiffs not to sleep on their rights. Although the decision did not close the door on subsequent proceedings by another member of the proposed class, it affirmed the existence of presumptive prejudice to the Defendants as a result of the delay and that the onus is on the plaintiff to establish that granting leave under section 2 of the CPA is in the interest of justice having regard to the competing interests at play.